Cyprus

Audit office says number of granted citizenships did not meet criteria (Updated)

A substantial number of citizenships granted through the island’s investment programme did not meet the criteria, suggesting an abuse of power by government officials, an audit service report said on Friday.

In a report of the findings into a number of citizenships granted to company executives and their dependents, the auditor-general said they got the impression that “some of the people exercising public authority completely ignored the existing legal and regulatory framework and essentially thought they could act at will.”

“Consequently, there appears to be a possibility of abuse of power by people exercising public authority,” the report said.

The auditor-general launched the probe after the permanent secretary of the interior ministry told parliament in October that 18 of 23 citizenships that were expedited on the minister’s instructions concerned company executives connected to the casino resort.

“After this statement, we decided … to conduct an audit of the process of naturalisation of the 18 individuals,” the report said. “Because of the serious findings during this audit, we decided to extend the audit to other cases of senior company executives who were naturalised.”

The report said the 18 individuals were possibly naturalised by the cabinet decision while it was known that they did not meet the existing criteria.

“This possibly means a loss of tax revenues worth €1.7m by not paying €100,000 in income tax by each person and €1.7m in VAT on the €500,000, the cost of each house that should have been acquired, plus the indirect benefits to the economy and state revenues from construction and sale of the houses.”

According to the report, the audit found 64 additional individuals related to another company (unnamed) who were naturalised.

The two sets of cases concern the period between 2014 and 2017 and 2019, respectively.

The fact that in both cases auditors found potential breaches of the legislation “essentially shows that the flaws of the programme remained unchanged until the moment of its recent termination.”

The government decided to terminate the programme after Al Jazeera aired an undercover video showing former House president Demetris Syllouris and former Akel MP Christakis Giovanis offering assistance, in return for cash, to a fictitious Chinese businessman with a criminal record to secure citizenship. Both have since resigned while the EU has launched legal proceedings against Cyprus.

The report was the latest in a string of negative publications relating to the programme. However, until that time, the government fiercely defended the programme, suggesting Cyprus was being unfairly targeted.

The auditor said the developments were the unavoidable result of a dodgy state of affairs, possibly plagued by corruption and other criminal offences.

“Unfortunately, the failure to timely put corrective measures in place on behalf of the government has led to the sudden termination of the programme. All that remains now is the rigorous pursuit of accountability.”

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